We’re spending $107 billion on cancer drugs, but is it worth it?

A flood of innovative cancertreatments helped fuel an 11.5 percent surge in spending on oncology drugs over the past year -- to $107 billion globally, according to a new report. But there's a crucial question the study can't quite answer: How much are patients benefiting from this expanding arsenal of high-priced drugs?

The report from IMS Institute for Healthcare Informatics highlights 70 new cancer treatments, treating more than 20 types of tumors, all approved in the past five years. In the United States, where cancer drug spending was $37.8 billion last year, those new drugs alone account for $9.4 billion of the increase since 2010.

"The highlight, to us, is to see this surge of innovation in cancer treatments. ... That's a remarkable leap forward in terms of cancer care, in relatively short order," said Murray Aitken, executive director of the IMS institute. When Aitken and colleagues look forward, they see more of the same: Close to 600 drugs are in late-stage development, and will create another wave of new treatments.

But the 72 percent increase in spending over five years in the United States raises a trickier question, too: Are cancer patients getting their money's worth?

As $10,000-a-month cancer drugs have become a norm, doctors have begun to push back, insisting that many drugs aren't worth the price.

"I think with the current incentive structure where the sky's the limit [on price], it doesn’t matter if you make a great drug or a marginal drug," said Vinay Prasad, an oncologist at Oregon Health and Science University who studies cancer drug approvals. "The problem is, I’m certain with the amount we’re spending extra, we’re not getting the commensurate value with our patients being better off."

Not all approved cancer drugs are alike. Some may provide profound benefits, lengthening life by years; others may significantly shrink a tumor, but increase patients' chances of survival only by small amounts. The IMS study notes that many of the recent drug approvals have had significant clinical benefits, but it does not quantify their overall impact.

Prasad's work has found that the high prices of new cancer drugs don't reliably reflect their novelty or how well they worked in trials. One of his studies, published last year in JAMA Internal Medicine, examined 36 drugs that were approved between 2008 and 2012 based on early indicators that they were working, such as evidence that they shrank tumors. Such measures are meant to speed up drug approvals, but there's no guarantee that a drug that temporarily stops a tumor from growing will extend lives. Only five of the 36 drugs in his study lengthened patients' lives, despite a median of more than four years of follow-up study.

Even if a drug is shown to be effective, the question of cost is unresolved.

One drug that is profiled in the report is a lung cancer medication called necitumumab, which costs $11,000 to $12,000 a month. It has been shown to lengthen life by 1.6 months. If its price were linked to its effectiveness, a three-week cycle would cost less than $1,500, according to a JAMA Oncology study published last year.

How price increases are washing out savings on old drugs

A key way that overall drug spending has been contained over time is through the expiration of patents and exclusivity rights that protect drugs against competition. The IMS report shows that, although the savings when drugs lose their exclusivity has been considerable, it has been counteracted by the price increases on existing drugs.

In the chart below, which breaks down the increase in oncology drug spending in the United States over the past five years, you can see how these two drivers of spending wash each other out. The effects of price increases for branded drugs approved before 2010 are shown in green: a $5.9 billion increase. This is the amount of spending that can be traced to price inflation of existing drugs, although it doesn't account for rebates and discounts. The red bar shows the effects of loss of exclusivity on older drugs -- a $4.8 billion decrease in spending that occurred when competition began.

Global Oncology Trend Report, IMS Health

In other countries, branded drugs approved before 2010 actually decreased in price over the same time period.

But there's an upside to the high spending for cancer drugs in the United States: Patients here get access to more treatments than patients in other countries, Aitken points out.

The study found that, of 49 new drugs analyzed that were introduced between 2010 and 2014, only six countries -- including the United States -- had access to morethan half of the novel treatments.

Rebates and discounts

The report also tries to account for the effects of rebates and discounts, which drugmakers and pharmacy benefit managers secretly negotiate off of the prices listed on invoices.

Brand name list prices grew 6.4 percent between 2014 and 2015, the report found. But after discounts, the "real" growth in cancer drug prices is only 4.8 percent.

Although this does suggest that rebates and discounts are providing some relief from high list prices, it also shows that, for cancer drugs, these rebates have been markedly less than discounts for drugs, generally. A report earlier this year from IMS found that the real growth in overall drug prices, after rebates, was 2.8 percent, suggesting that the discounts were deeper for drugs treating other illnesses.

The report clearly shows that Americans get good access to cancer drugs compared to people in many other countries. What it also shows is that access comes with a price. Whether that price is a good value depends on how effective the drugs are -- which, as Prasad's research points out, is still unknown for a surprising number of drugs.